In some cases, you do not pay fringe benefit tax (FBT) on benefits or include them in your FBT return, but you still need to keep records.
Charitable organisation exemption
Charities may be exempt from paying FBT on benefits provided to employees while carrying out their charitable activities.
The exemption may not apply to short-term charge facilities
You may need to pay FBT if you provide short-term charge facilities to employees. A short-term charge facility allows your employees to buy, hire or charge goods or services that have no connection with your organisation, where you’re responsible for the payment. For example, a business credit card for private purchases.
FBT applies if the value of the short-term charge facility is more than the smaller of these 2 amounts.
- 5% of the employee's salary or wages in a tax year.
- $1,200 per employee, in a tax year.
Employment-related loans to employees are not short-term charge facilities.
Charities and fringe benefit tax
Health and safety exemption
FBT does not apply to benefits related to health and safety risk management in the workplace.
Examples include:
- flu vaccinations
- personal protective equipment (PPE) such as protective and high visibility clothing, hard hats.
PPE does not need to have your business branding to qualify for the health and safety exemption.
The exemption does not apply to items such as gym subscriptions or employer-paid health insurance premiums.
Do not include benefits that qualify for the health and safety exemption in your FBT return.
Public transport and employer-provided transport exemptions
Certain public transport benefits you provide may be exempt. They must be mainly for employees travelling between work and home and be 1 of the exempt transport options.
If you qualify for an exemption, you do not include them in your FBT return, but you must keep records.
Exempt public transport fares
The exempt public transport fare options are:
- bus
- train
- ferry
- cable car.
The exemption also includes transport partly funded by the Total Mobility Scheme, such as taxis or shuttles.
Exempt employer-provided transport
This exemption applies if you provide transport that is mainly for employees travelling between work and home.
It includes:
- bicycles
- electric bikes
- scooters
- electric scooters
- other low-powered vehicles declared by NZ Transport Agency Waka Kotahi as mobility devices or non-motor vehicles.
This exemption also applies if you help pay for certain vehicle share services for any of these transport modes.
For more information, see the Tax Information Bulletin, vol 35 no 6 on our Tax Technical website.
- Public transport exemption (page 77)
- Employer provided transport (page 80)
Tax Information Bulletin, vol 35 no 6 (July 2023) (taxtechnical.ird.govt.nz)
Goods and services FBT may not apply to
There are several situations when FBT may not apply to goods you provide to your employees. For example, no FBT applies if:
- the discounted sale price of goods provided to your employee is more than the market value
- you supply your employee with business tools such as laptops and cell phones, mainly provided for business purposes and available for their private use, with a value of $5,000 or less, including GST.
Employees working away from home
If your employee is working in a temporary workplace and you pay for their partner and/or family to visit them, FBT may not apply. The value of the travel must be no more than the amount that would have been provided as a tax-free allowance to the employee if they had travelled home instead.
Other exclusions
FBT does not apply to:
- distinctive work clothing you provide forming part of a uniform identifiable with your business
- car parks on your own business premises or leased if you have the main right to use it
- membership reward schemes your employee has joined for their own use, though FBT may apply if you have an arrangement with the scheme’s promoter.
More information
For more detailed information about FBT on goods and services and all the situations FBT may not apply, refer to Part 3 - Unclassified benefits and gift cards in the Fringe benefit tax guide – IR409.